Triumph ordeal unlikely to hurt giant Carnival cruise company

It will take a lot more than the bad publicity of the Carnival Triumph nightmare to wound Carnival Corp., which owns a huge chunk of the global cruise business.

The Miami-based cruise company's lines include Carnival, Princess Cruises, Costa Cruises, Holland America Line and Cunard — legendary operator of ultra-luxury liners such as the Queen Elizabeth and the Queen Mary 2.

"I think they have about roughly 50 percent of the industry capacity," said Jaime M. Katz, a research analyst with Morningstar, "and I don't think that's going anywhere."

Carnival's fleets sail in North and South America, parts of Europe and Australia, serving nearly half of the passengers who book cruises worldwide.

Navigating troubled waters is not new for the company. The first ship built specifically for Carnival was the TSS Mardi Gras. During its maiden voyage in 1972, the Mardi Gras hit a sandbar near the Port of Miami, now PortMiami.

Entrepreneur Ted Arison launched the company in 1972 as part of Boston-based American International Travel Services. Two years later, Arison snapped up Carnival for the whopping price of $1—and the assumption of $5 million in AITS's debt, according to company reports.

Current Chairman and CEO and Micky Arison, 63, who took over Carnival in 1979 from his father, also owns the Miami Heat.

Growing through acquisition, the company sold shares to the public for the first time in 1989. It changed its name to Carnival Corp. in 1993 to distinguish itself from its flagship business, company records show.

Analysts now predict that it's unlikely that recent high-profile incidents, three in less than three years, will severely damage the company.

In 2010, Carnival Splendor was crippled at sea by a fire in the engine room and left adrift off the west coast of Mexico. It arrived under tow in San Diego three days later.

In 2012, 32 people died off the coast of Italy when the Costa Concordia, operated by Italian unit Costa Cruises, ran aground.

This time, with the Triumph, it was an onboard fire that left the ship adrift without air-conditiong, power and few working toilets.

The Triumph incident has forced the company to cancel that ship's next 14 trips and cancellations and vessel repairs could cost the company eight to 10 cents a share (about $64 million to $80 million) over the first half of the 2013 financial year, Carnival Corp. said this week.

''We pride ourselves on providing our guests a great vacation experience,'' said Gerald R. Cahill, the chief executive of Carnival, before boarding the Triumph in Mobile. ''Clearly, we failed in this particular case.''

Through it all, Wall Street seems largely unfazed, however.

"Their stock barely blipped, and ultimately, that's the final arbiter on whether a company is succeeding or tanking," said Jeff Mustard, president of the Bamboo Agency, a marketing and media company in Delray Beach.

"Quite frankly, if the public were outraged, it would be reflected in some sort of stock dip, and it has not happened," said Mustard, who is author of four case studies exploring Carnival's handling of the Costa Concordia tragedy. "I think people see this for what it is, and what it is is an accident."

So far cruise sales across the company's franchise network of more than 850 home-based travel agents continue to be robust and at times "record-breaking," Garcia said.

Customers already booked on cruises aren't canceling or making changes, but those with reservations on future Triumph sailings are concerned and making inquiries, she added.

"First time cruisers may be a little bit hesitant, but people who have been [repeat] cruisers are loyal and understand that things happen," Garcia said.

Don Walker, co-president of Delray Beach-based iCruise.com said the company will book more cruises this week than any other week in its history, and hadn't seen a dip in sales of any kind since the incident.

"We saw an unbelievable increase of 76 percent this Valentine's day compared to last Valentine's Day, "Walker said. "Our clients are certainly feeling the love right now with an amazing array of promotions in the market including free gratuities, free beverage packages and ship board spending credits."

"Carnival seems to be stepping up by not only refunding the guests but also providing a future cruise and $500," added Walker.

Others in the industry support Carnival's handling of the emergency.

"Looking at the way Carnival handled it, they didn't sugar coat it or try to minimize the damage," said Stewart Chiron, President and CEO of Miami-based industry website CruiseGuy.com, noting the regular updates given to the media.

"Carnival was very upfront from the beginning, proactive and determined to minimize the suffering of their passengers," said Chiron.